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Abstract:

A residential electric grid (microgrid) is proposed as a distribution
arrangement between a utility company and a group of individual
residential consumers. The residential consumers are also viewed as
"producers" of renewable energy and are defined as "prosumers". An
aggregator is used at the microgrid to negotiate with the utility on
behalf of the group of prosumers, commanding a better price for excess
electricity sold back to the utility (especially as part of a Demand
Response (DR) program). Importantly, the microgrid is constructed to
include energy storage capability at the microgrid. Therefore, the
arrangement is capable of supplying power to the residential customers in
the event of an outage at the macrogrid level, and also selling back the
electricity to the utility as part of a DR program.

Claims:

1. An electricity microgrid for controlling electricity flow between a
plurality of residential consumers and at least one utility company, the
microgrid comprising: at least one renewable generation source for
generating electricity at the microgrid; means for storing at least a
fraction of the generated electricity at the microgrid; and an aggregator
entity for purchasing electricity from the at least one utility for
distribution to the plurality of residential consumers connected to the
microgrid and pooling the electricity generated by the at least one
renewable generation source, the aggregator utilizing a rules-based
mechanism to perform the purchasing of electricity.

2. An electricity microgrid as defined in claim 1 wherein the aggregator
is further configured to sell at least a portion of the electricity
generated by the microgrid to a utility.

3. An electricity microgrid as defined in claim 2 where the generated
electricity is sold to the utility as part of a Demand Response (DR)
program.

4. An electricity microgrid as defined in claim 1 wherein the at least
one renewable generation source includes a plurality of renewable
generation sources installed at residences of a plurality of residential
consumers, the plurality of residential consumers defined as residential
prosumers.

5. An electricity microgrid as defined in claim 1 wherein the at least
one renewable generation source includes a stand-alone renewable
generation source installed along the microgrid and controlled by the
aggregator entity.

6. An electricity microgrid as defined in claim 1 wherein the rules-based
mechanism includes the following rules:
Putilityprosumer<Paggregatorprosumer
Pprosumerutility≧Pprosumeraggregator
Pprosumerutility≧Paggregatorutility
P--DRutilityaggregator>P--No_DRutilityag-
gregator Putilityprosumer≦P_No_DRutilityaggreg-
ator Paggregator1.sup.aggregator 2.gtoreq.Paggregator2.sup.aggregator1, where a prosumer is a residential consumer including a
renewable generation source, Pprosumerutility is defined as the
electricity price charged by the utility to the prosumer,
Paggregatorutility is defined as the electricity price charged
by the utility to the aggregator entity, Putilityprosumer is
defined as the renewable electricity price that the utility pays to the
prosumer, Pprosumeraggregator is defined as the electricity
price charged by the aggregator entity to the prosumer,
Paggregatorprosumer is defined as the renewable electricity
price that the aggregator entity pays to the prosumer,
P_No_DRutilityaggregator is defined as the renewable
electricity price that utility pays to the aggregator entity without a
Demand Response program, P_DRutilityaggregator is defined as
the renewable electricity price that the utility pays to the aggregator
entity during a Demand Response program, Paggregator2.sup.aggregator1 is defined as the electricity price paid by a second
aggregator entity to buy from a first aggregator entity, and
Paggregator1.sup.aggregator2is defined as the electricity price
paid by the first aggregator entity to buy from the second aggregator
entity.

7. A method of controlling a bi-directional flow of electricity between a
utility company and a plurality of residential consumers, at least a
subset of the plurality of residential consumers including renewable
sources for generating electricity, the method including the steps of:
creating an electric microgrid interconnecting the plurality of
residential consumers; installing electricity storage means at the
microgrid; and providing an aggregator at the microgrid to controlling
the buying and selling of electricity to the utility company on behalf of
the plurality of residential consumers.

8. The method as defined in claim 7 wherein the aggregator pools the
electricity generated by the subset of the plurality of residential
consumers and sells the pooled electricity to the utility company as part
of a Demand Response program.

9. The method as defined in claim 7 wherein the aggregator is configured
to control the electricity storage means and allow for stored electricity
to be sold to separate ones of the plurality of residential consumers
during power outage or as part of a load shifting program.

[0002] The present invention relates to an electric microgrid suitable for
implementation in the residential environment and, more particularly, to
the utilization of an aggregator within the microgrid as an intermediary
between a group of residential electric power customers (the customers
also producers of renewable energy) and the electric utility supplier.

BACKGROUND OF THE INVENTION

[0003] Worldwide demand for energy has recently begun to increase at an
accelerating rate due, in part, to increased consumption by developing
economies such as China, India and the region of Southeast Asia. This
increased demand, primarily for fossil fuel energy, has resulted in
pressures on energy delivery and supply systems, leading to sharply
increased energy prices. These higher fossil fuel prices may, in turn,
result in increased electricity prices to consumers due to the extensive
use of fossil fuels in electrical generating plants.

[0004] Moreover, electrical generation and distribution systems in the
United States have come under increasing pressure due to increased use of
electricity and increased peak demand. Electric utilities have been
forced to develop load management strategies to minimize supply
disruptions during periods of high demand. Environmental concerns and
energy price volatility have also become significant factors impacting
power distribution, spurring the development of renewable sources of
energy and encouraging residential consumers to become active
participants in the generation of renewable energy.

[0005] Indeed, all of these factors are now moving the power industry away
from the legacy power infrastructure system (where electricity only flows
from the generation site to the distribution site) to a more intelligent
power network where a bi-directional flow of electricity is managed by an
associated communication network, working together to improve the
efficiency and economy of power distribution. The communication network
provides messaging between various components of the power network
(generators, transmission links, distribution networks, end-user
appliances, `smart` power meters, etc.) so as to create an optimized
power network/grid (often referred to in the art as a "smart grid").

[0006] There is also a paradigm shift underway in the energy market from
an integrated (monopoly) model to a more competitive model, the
competitive model introducing an intermediary in the form of an
"aggregator" as an interface between consumers and utility companies. In
the integrated model, the generation, transmission and distribution of
electricity is controlled within a well-bounded geographical area by a
local utility company. This type of utility company is commonly referred
to as a vertically-integrated utility.

[0007] The more competitive model beginning to emerge is partitioned
between a number of separate and distinct entities: a power generation
company, a market operating company, a transmission system operating
company, distributors and retailers. This market change has been
encouraged to achieve lower power system operation cost and higher
efficiency, as well as offering the consumer the opportunity to
proactively become involved through flexible choice options.

[0008] For the purposes of explaining the subject matter of the present
invention it will be presumed that there are two major operational
domains in this competitive model: (1) the market domain and (2) the
network domain. (It is to be understood that while this presumption is
valid in many situations, there remains a component of the electricity
market where a single entity is responsible for generation, distribution
and retail marketing (billing, etc.), falling into both the market domain
and the network domain.) Within the market domain, the power generation
companies make a bid to supply a certain amount of electricity at a
selected price. The wholesale market operating company receives the bids
from a number of generation companies, ranks them and then accepts enough
bids to satisfy the forecasted demand (with a safety margin). The
retailers then purchase electricity from the wholesale market operating
companies at spot prices and sell retail electricity to their
customers/consumers. With competition at the retail level, consumers can
change suppliers when they are offered a better retail price.

[0009] Within the network domain, the transmission system operating
company is primarily responsible for operating and ensuring the security
of the transmission network. As such, the transmission system operating
company is not involved in the "marketing" of electricity and its role in
generation is limited to ensuring that the submitted schedules are within
the transmission network security margins. Similarly, distributors are
responsible for managing and maintaining related distribution networks
via substation transformers and are not involved in the buying and
selling of power. Distributors are also responsible for meter reading at
the consumer's location and then communicating this information to the
proper retailer for billing purposes.

[0010] Over the last few years, several innovative applications have been
proposed within the larger scope of the "smart grid" as outlined above,
based on the requirements of different market domains, such as
commercial/industrial facilities, critical government facilities (e.g.,
military), and the like. One application in particular is referred to as
a "microgrid", which is defined for the purposes of the present invention
as a localized grouping of electricity sources and loads that normally
operate connected to--and synchronous with--a traditional, centralized
grid (defined as a "macrogrid"), but can disconnect and function
autonomously as physical and/or economic conditions dictate.

[0011] Furthermore, in the scope of successful deployment of smart grid
applications, several initiatives to bring aggregators into the network
model have been developed. For the most part, aggregators are treated as
"electric service suppliers" that provide a related group of consumers
with a broad category of innovative services including, perhaps,
collecting a group of consumers into a single purchasing unit to
negotiate the purse of electricity in the energy market. Also, these
aggregators may function to negotiate "Demand Response" (DR). Demand
Response is a program that seeks to reduce peak load in exchange for
offering financial incentives to the consumer; that is, requesting the
consumer to reduce their consumption during peak load conditions. In
general, the aggregator business model has been proven successful in only
the commercial/industrial market, where the amount of energy savings
through DR during peak load time has been found to be significant.

[0012] While various new business models and features have been successful
in providing economy to commercial/industrial electricity consumers,
there has been no similar success in the residential marketplace. The
existing aggregators available in the industrial and commercial domain
are not interested in working with individual residential consumers,
since their electricity consumption (on the order of kWh) is much less
and their chance of savings during DR is not profitable for the
aggregator. Additionally, residential consumers are not truly motivated
to join the DR program, since there are associated up-front costs
associated with `smart` appliances, home automation devices, internal
grid structures, and the like.

[0013] Thus, a need remains to provide a system architecture suitable for
use in the residential environment that presents the benefits of consumer
interaction with the electric utility business.

SUMMARY OF THE INVENTION

[0014] The needs remaining in the art are addressed by the present
invention, which relates to an electric microgrid suitable for
implementation in the residential environment and, more particularly, to
the utilization of an aggregator within the microgrid as an intermediary
between a group of residential electric power customers (which are also
capable of generating electricity from renewable sources) and the
electric utility supplier. For the purposes of the present invention, a
"microgrid" is defined as a localized grouping of electricity sources and
loads that normally operate connected to--and synchronous with--a
traditional, centralized grid (defined as a "macrogrid"), but can
disconnect and function autonomously as physical and/or economic
conditions dictate.

[0015] For the purposes of the present invention, an aggregator is defined
as combining at least the following elements: (1) multiple residential
consumers with their in-house renewable electricity generation (as
described below, these individuals will be defined as "prosumers",
inasmuch as they function as both producers and consumers of electricity;
(2) microgrid-based energy storage capability; (3) flexible electricity
consumption at the microgrid level (for example, shifting the load
through storage); and (4) participation in the energy market through a
Demand Response (DR) program. "Renewable electricity generation" is
considered to include, but not be limited to, solar, wind, biomass, and
the like--all capable of being generated at a residential premise
location.

[0016] In accordance with the present invention, the utilization of a
residential aggregator within a microgrid serving a plurality of
residential prosumers allows for the residential prosumers to recognize a
higher price for their (collectively) produced renewable electricity and
facilitates a better negotiating position with the utility companies.
Moreover, by including energy storage capability at the microgrid itself,
the arrangement is capable of supplying power to the residential
customers in the event of an outage at the macrogrid level and/or selling
the electricity back to the utility as part of a DR program. Additional
benefits in terms of installing microgrid-based renewable sources (for
use by the prosumers and/or to create electricity to sell back to the
utility) are also contemplated. The larger size of the aggregator (with
respect to the individual residential prosumers) thus allows for the
aggregator to obtain financial benefits for the residential prosumer
beyond what the individual would be able to do.

[0017] Other and further features and advantages of the present invention
will become apparent during the course of the following discussion and by
reference to the accompanying drawings.

BRIEF DESCRIPTION OF THE DRAWINGS

[0018] Referring now to the drawings, where like numerals represent like
parts in several views:

[0019] FIG. 1 is a simplified diagram of a conventional prior art
arrangement for distributing power between a utility macrogrid and a
plurality of residential customers;

[0020]FIG. 2 is a simplified diagram of the arrangement of the present
invention, utilizing an aggregator between the utility macrogrid and a
plurality of prosumers, forming a microgrid for managing electricity
consumption and generation of the prosumers;

[0021] FIG. 3 illustrates the microgrid architecture of the present
invention for utilizing an aggregator to communicate with one or more
utility companies on behalf of a group of residential prosumers; and

[0022]FIG. 4 is a diagram illustrating the relationship between a power
flow network and a communication network in the implementation of the
aggregator-based microgrid in accordance with the present invention.

DETAILED DESCRIPTION

[0023] The present invention proposes a model of an electric microgrid for
the residential distribution domain, utilizing an aggregator to provide
localized energy storage and coordination among a group of residential
"prosumers" connected to the microgrid for intelligent bi-directional
electricity usage, where a "prosumer" is defined as an individual
(residential individual) that both consumes and produces electricity. In
accordance with the present invention, it is presumed that a significant
number of the residences connected to the microgrid are capable of
generating electricity from renewable resources (e.g., solar, wind,
biomass); however, the benefits of the aggregator-based microgrid are
applicable (to a lesser degree) to a traditional residential consumer as
well as a residential prosumer. As will be discussed below, the economic
benefits available to the residential prosumer in this
aggregator-microgrid model serves to further encourage the installation
of additional renewable energy sources.

[0024] In particular, the aggregator-based electric microgrid of the
present invention generates a direct economic benefit for the residential
prosumer by ultimately allowing the aggregator to offer a better price to
a utility for the renewable electricity produced by residential
individuals. That is, the residential aggregator, from its position of
"large" energy consumer, is able to both negotiate better electricity
prices with utilities and more effectively leverage existing energy
market offerings such as Demand Response (DR) programs.

[0025] Prior to describing the details of the arrangement of the present
invention, an illustration of the current residential electricity
distribution system will be briefly reviewed, with respect to FIG. 1. In
the diagram of FIG. 1, a plurality of residential customers 1-1, 1-2, . .
. 1-N are shown as receiving electricity from (and, in limited form,
selling energy to) a utility distribution company via a macrogrid 2. In
this particular configuration, macrogrid 2 utilizes a set of three
neighborhood step-down transformers 3-1, 3-2 and 3-3 to delivery
electricity to groups of residential customers 1 in a conventional
manner. The down-directed arrows (labeled "B" for buy) illustrate the
conventional flow of electricity from distribution macrogrid 2 passing
through transformer 3 and into an exemplary residential customer premise
1-i, that is, the residential customer is purchasing electricity from the
utility company via distribution macrogrid 2.

[0026] A subset of residential customers 1 are defined as including
renewable resources 4 (shown for the sake of simplicity as a solar array,
with the understanding that wind, biomass or other renewable resources
may be used), with the capability of then "selling" excess power back to
the utility. The up-directed arrows (labeled "S" for sell) illustrate the
opportunity for residential customers to directly sell electricity from
their renewable energy sources back to the utility. If additional
electricity is produced, it is usually fed into the utility at a
pre-defined price (typically less than the cost of buying electricity
from the grid). This is defined as a "Feed-in Tariff" (FiT) policy
mechanism that has been designed to encourage the adoption of renewable
energy. Different tariff rates are typically set for different renewable
energy technologies, depending on the cost of resource development in
each case. Additionally, the tariff may depend on state and federal
regulations, place of installation, size of installation, technology,
etc.

[0027] To date, the participation of residential renewable energy
generators in the energy marketplace has been very limited. The
residential customer, as an individual, has not found it economical to
participate in a regular basis in this arena, since his production in
generally on the order of kWh, and a utility is interested in purchasing
electricity on the order of MWh. Additionally, the price at which a
utility is willing to buy back electricity from an individual customer is
not sufficiently encouraging to motivate the individual to install more
renewable sources.

[0028] These and various other limitations of the state of the art are
addressed by the present invention, which provides an electric microgrid
suitable for implementation in the residential environment, including an
aggregator within the microgrid that functions as an intermediary between
a group of residential electric power prosumers and the electric utility
supplier.

[0029]FIG. 2 illustrates a system architecture of the arrangement of the
present invention, where a residential aggregator 10 is disposed between
the utility distribution company macrogrid 2 and a microgrid 12
comprising a plurality of residential customers 1 (for the sake of
clarity, transformers 3 are not specifically shown in this view, but are
understood as utilized to provide the proper voltage levels to
residential customers). In this model, residential aggregator 10
negotiates prices with the utility on behalf of the collected group of
residential customers. In turn, the customers purchase their electricity
from aggregator 10, selling back renewable energy to aggregator 10. Those
residences that also include a generation source of renewable energy
(symbolized by solar array 4) are defined as residential prosumers 1-P;
the remaining conventional residential customers are shown by reference
numeral 1-C in FIG. 2. An energy storage module 14 is shown as associated
with microgrid 12 (module 14 may, in fact, comprise a plurality of
storage devices and may be configured as different specific devices, as
discussed below). Energy storage module 14, in most cases, will be owned
and controlled by aggregator 10. In one embodiment of the present
invention, microgrid 12 may also include a stand-alone renewable
generator 16, sized to serve the microgrid (that is, not a large entity
for serving an industrial location, but as an additional community
source).

[0030] In the embodiment illustrated in FIG. 2, a single aggregator entity
10 is shown as interacting with a pair of separate microgrids 12. It is
contemplated that a single aggregator 10 may be properly configured
(i.e., computer-controlled) to manage/control a plurality of microgrids
12. In accordance with the present invention, aggregator 10 includes a
management control system (with, perhaps, a microprocessor or other
computer-controlled arrangement) that operates upon a number of
pre-defined rules (as outline below) to control the buying and selling of
electricity between a utility and the residential prosumers forming the
microgrids 12.

[0031] FIG. 3 is a high level overview diagram of an exemplary
aggregator-based microgrid arrangement 10 formed in accordance with the
present invention. Arrangement 10 includes a microgrid 12, where a pair
of residential prosumers 1-P1 and 1-P2 are shown as coupled to microgrid
12. In one embodiment, aggregator 12 may install stand-alone renewable
sources at the microgrid level, allowing for the generation of a larger
supply of electricity for storage and sale to the utility. A
free-standing, micro-level wind generator and biomass converter are
illustrated in FIG. 3 as examples of such renewable generators 16 that
are coupled to microgrid 12. A communication network 30, useful in
controlling the elements connected to microgrid 12, is also shown in FIG.
3.

[0032] It is an important aspect of the present invention that microgrid
12 also have power storage capability, shown as battery 14 in FIG. 3.
While shown as a "battery" it is to be understood that any suitable
type(s) of storage may be utilized as part of microgrid 12. For example,
fuel cells, hydro, thermal, fly-wheel, etc. are all well-known types of
electricity storage that may be employed at the microgrid. For the
purposes of the present discussion, the use of the term "battery" should
be considered as exemplary only. In case of a power failure at the
macrogrid level, battery 14 can provide temporary electricity for a
critical residential load. Additionally, the ability to store electricity
and thus provide load shifting at the microgrid level provides an
economic benefit to the residences coupled to microgrid 12. The
capability to shift load/store electricity at the microgrid level may
also encourage the consumers to install e-car charging stations (it is
possible that the e-car batteries may be used as a storage element on the
microgrid, shown as element 7 in FIG. 3). The economic benefits of
microgrid 12 will create interest in the residents with respect to the
installation of even more renewable sources.

[0033] Indeed, by virtue of combining/storing the renewable energy
produced by the various residential sources on microgrid 12, aggregator
10 provides a significant role in negotiating prices with the various
utilities, adapting electricity prices according to the collective
contribution of the microgrid to peak load savings, renewable production
and storage.

[0034]FIG. 4 is a diagram illustrating the relationship between a power
flow network 20 and a communication network 30 in the implementation of
the residential aggregator-based microgrid 12 of the present invention.
In this diagram, residential loads L, renewable generation sources G
(such as solar panels 4) and energy storage units ES (such as batteries
14) are shown as connected along power flow network 20 and ultimately
connected to macrogrid 2. Communication network 30 is shown as an overlay
on power flow network 20 and communicates with a smart interface unit 32
associated with each element on microgrid 12. The communications forming
network 30 are shown by dotted lines in FIG. 4. A microgrid management
system 50 is also shown in FIG. 4, where this system is programmed to
perform the aggregator functions based upon a set of rules described
below. Control system 50, in one embodiment, includes computer readable
medium for storing a set of instructions for implementing these rules.

[0035] One embodiment of the present invention is applicable to a "single
owner-multiple renter" residential model, where there is generally a
single authority that owns a number of apartments, managing and renting
them to individual families. In these arrangements, the number of
households may vary from less than 100 families to upwards of 1000 or
more families. In this arrangement, each renter generally has an
individual contract with the utility company, paying directly for his own
consumption. The owner of the larger community may install renewable
sources (e.g., rooftop solar cells or the like), but the individual
renters are not able to implement such features. The average electricity
load for each household may vary from 4 to 5 kW. Thus, for a 1000-family
community, the total load may approach 5 MW.

[0036] In accordance with the present invention, this apartment complex
may be defined as its own microgrid, with an aggregator acting on behalf
of the single authority that owns the complex. The size of this
arrangement lends itself as a good candidate for DR and other cooperative
functionalities within the microgrid.

[0037] In another embodiment of the present invention, a microgrid may be
defined on the "neighborhood" level and associated with a number of
single family dwellings. Similar economies apply in this case, with each
household anywhere from about 5 to 10 kWh. Unlike the single
owner-multiple renter model, the individual homeowners may each have the
capability to install their own renewable generation sources and provide
some amount of electricity back to the microgrid.

[0038] In general, several rules have been developed that provide the
business model for use by the aggregator in managing the microgrid
arrangement of the present invention. As described above, the rules may
be embodied as a set of instructions stored within a general purpose or
special purpose computer (or other computer readable medium) formed as
part of the aggregator management control system. The following
definitions are used in these rules:

[0039] Electricity price charged
by the utility to the prosumer=Pprosumerutility

[0040]
Electricity price charged by the utility to the
aggregator=Paggregatorutility

[0041] Renewable electricity
price that utility pays to the prosumer=Putilityprosumer

[0042] Electricity price charged by the aggregator to the
prosumer=Pprosumeraggregator

[0043] Renewable electricity
price that aggregators pays to the prosumer=Paggregatorprosumer

[0044] Renewable electricity price that utility pays to the aggregators
without DR=P_No_DRutilityaggregator

[0045] Renewable
electricity price that utility pays to the aggregators during
DR=P_DRutilityaggregator

[0049] Based on these definitions, the following rules are preferably
implemented by the aggregator:

[0050]
Putilityprosumer<Paggregatorprosumer: the prosumer
point of view, the price of the renewable electricity received from the
aggregator needs to be greater than the price the prosumer would
otherwise directly receive from the utility.

[0051]
Pprosumerutility≧Pprosumeraggregator: From the
prosumer point of view, the electricity price from the aggregator cannot
be more than the price they were paying to the utility (or at that
particular time other houses who are not participating in the aggregator
model are paying to the utility).

[0052]
Pprosumerutility≧Paggregatorutility: From the
aggregator point of view, the electricity price from the utility must be
at least similar to what an individual prosumer pays to receive power
from the utility.

[0053]
P_DRutilityaggregator>P_No_DRutilityaggregator:
From the aggregator point of view, the price of electricity that the
aggregator sells to the utility during peak load time must be higher than
the normal flat price that the utility pays to the aggregator. In
general, there must be a predictive model and an agreement in place
between the utility and the aggregator to decide on the peak load amount
for feed-in electricity during DR and the normal feed-in electricity.

[0054] Putilityprosumer≦P_No_DRutilityaggregat-
or: From the aggregator and prosumer point of view, both receive the same
price with/without aggregator presence from the utility for their
produced additional electricity. Regulation will monitor that the utility
does not obstruct the aggregator business. In accordance with the present
invention, everybody will benefit from the proposed model

[0055]
Paggregator 1aggregator2≧Paggregator
2aggregator1: From the aggregator point of view, it might be also
possible to trade electricity among neighboring aggregators.

[0056] Using these definitions and rules, it is clear that implementing a
microgrid with a residential aggregator benefits a local utility company
by virtue of encouraging the installation of renewable energy sources and
reducing their investments in new installations. Indeed, with the
on-going incentives in various countries encouraging "green" energy
sources, an ever-increasing number of renewable sources will be deployed
by a variety of customers, including residential customers (all improving
the financial incentives for utilities to become involved in the
aggregator-based microgrid structure of the present invention).

[0057] The inclusion of a residential aggregator in the network between
the utility and residential customer creates another entity that can
store electricity for use by residents on the microgrid in cases of
overload or fault conditions on the macrogrid. It is to be understood
that in its most general implementation, there may be multiple utility
companies that do business with the aggregator/microgrid, where each
utility has its own pricing structure.

[0058] The economic benefits to the aggregator entity are described in
detail herein below for a variety of different scenarios. In each case,
it is assumed that there are n residential prosumers coupled to a
microgrid, with each residential prosumer consuming k kWh of electricity
per day. Presuming that each residential customer can produce k' kWh
during the same 24-hour period, the microgrid is able to sell back to the
utility and/or store (n×k') kWh.

[0059] In one case, it is presumed that there is no opportunity to sell
the power back to the utility. In this scenario, the aggregator will
store the generated electricity and thereafter use it during load
shifting (or as a primary source during a macrogrid outage). Presuming
that the generated electricity k' is less than k and defining k'' as the
fraction of produced renewable energy that is supplied to the prosumer
(in this case, k'=k''), then the economic benefit of the
aggregator-microgrid arrangement to the aggregator can be expressed as
follows:

[0060] Modifying this scenario to include the ability of the aggregator to
participate in a DR program, defining k'' as that fraction of produced
renewable energy that is supplied to the prosumer from the microgrid's
storage facility and defining EDR as that fraction of generated renewable
energy that is sold back to the utility during DR, then k'=k''+EDR
(EDR<k), and the aggregator's economic benefit can be defined by:

[0061] In a slightly different scenario, it may be the case that the
aggregator is not participating in a DR program, but does sell back a
fraction of the generated electricity to the utility. In this model, it
is presumed that k'' is the fraction of the generated electricity that is
sold back to the utility at its regular price (as opposed to the higher
price commanded in a DR program). The economic benefit to the aggregator
in this case is defined by:

This approach may be best in situations where the renewable energy
produced by the consumers is relatively low with respect to their
consumption (i.e., k'<k).

[0062] In the most profitable model for the aggregator, the microgrid has
storage capability (and can therefore utilize load shifting) and the
aggregator participates in a DR program with a fraction k'' of produced
renewable electricity being fed back to the utility during Demand
Response. In this case, the benefit is defined as follows:)

[0063] In the case where the aggregator has installed additional renewable
electricity generation sources within the microgrid, additional
electricity can be fed into the grid and the benefit increases to:

where REC is defined as Renewable Energy Credits, a government program
where when a renewable facility generates one megawatt-hour of power, it
equates to one renewable energy credit. Indeed, the addition of
microgrid-based renewable electricity generation sources in any of the
scenarios described above results in an additional economic benefit of
(n×REC1-mwh).

[0064] Summarizing, it has been found that the formation of an electric
microgrid based on using an aggregator as an interface between the
utility and prosumers will allow for residential customers to participate
in bi-directional electricity flow in a more efficient and cost-effective
manner than now possible. By virtue of include electricity storage at the
microgrid, the prosumers benefit from increased reliability in the
delivery of electricity (during failure of the macrogrid) and load
shifting for off-peak conditions. Indeed, all consumers coupled to an
aggregator-based microgrid will have an incentive to install additional
renewable energy sources and continue to save on their utility bills. By
pooling the kWh of electricity produced by renewable generation sources
at the individual prosumers, the aggregator is able to negotiate
preferred rates with the utility company (or companies) and also
participate in DR programs, providing additional financial benefits to
the prosumer.

[0065] The foregoing description and drawings comprise illustrative
embodiments of the present invention. Having thus described exemplary
embodiments of the present invention, it should be noted by those skilled
in the art that these disclosures are exemplary only, and that various
other alternatives, adaptations and modifications may be made within the
scope of the present invention. Therefore, it is to be understood that
the invention is not to be limited to the specific embodiments disclosed
and the modifications and embodiments are intended to be included within
the scope of the appended claims.